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Economic and Marketing Information
FOR INDIANA FARMERS
Prepared by the Agricultural Staff of Purdue University, Lafayette, Indiana
March 29, 1968
INDIANA FARMERS
Alternatives for MAINTAINING THE FAMILY FARM*
Farmers today are much concerned
about the future organization of agriculture. Their loss of managerial independence is distintegrating the family
farm in ways not fully visible from
trends in farm numbers and sizes.
Farmers see at stake their freedom
and economic status relative to other
groups.
Farmers still have some options for
retaining and perhaps advancing the
entrepreneural independence inherent
in family farm agriculture if they
desire to do so. In terms of public
policy, the most forceful argument
for saving the family farm is to support decentralized decision-making and
diffused economic power in our society.
The Changing Structure of
Farming
Rapid change in number and sizes
of farms is an important cause of
anxiety among farmers and disturbances in rural communities, but this
alone is not the central issue. In size
of business, most farm production units
can still be classified as family farms.
That is, farm families provide a large
part of the labor except for seasonal
work and transitional stages in the
families. Furthermore, research studies
relating cost per unit to size have
generally shown that all of the economies of size can be achieved by modern
and fully mechanized one-man and
* This article was condensed from a speech
presented at Farm Science Days, Purdue
University, January 9, 1968.
by Paul L. Farris, Agricultural Economics
two-man farms. Although technology
will not remain constant in the future,
10 or 20 years from now we will
probably still count large numbers of
family size farms.
This is not to say that adequate
size of business is not important. While
the total number of farms in the
United States dropped from 4-1 million in 1959 to 3-25 million in 1966,
those with annual sales of $20,000 or
more rose from 325,000 to 527,000.
These farms accounted for about half
of the value of all farm products sold
in 1959 and about two-thirds in 1966.
Large farms also earned higher
average rates per unit of labor and
capital employed in farming than did
smaller farms. Many operators of small
units recognize that they must grow
larger to earn returns more nearly comparable with returns to similar resources employed outside of agriculture. Hence, farmers compete intensely
for additional land.
The share of business done by large
farms is expected to continue rising,
but the increase will come mainly from
greater numbers of farms in large size
classes rather than large farms in existence growing to massive size.
Loss of Managerial Independence
When we turn to entrepreneural
functions, we often see more profound
change. In producing some commodities, farmers are subject to increasing
degrees of managerial supervision from
suppliers and creditors. In selling,
farmers are faced with increasing pressures and incentives to standardize
product quality and to gear large and
regular volumes of product supplies
to particular market outlets.
Options in selling are being narrowed further by a reduced number of
buyers and by disappearance of traditional open markets. Many producers
are finding it more and more desirable
to have a specific sales outlet in sight
before making production decisions.
How much managerial independence has been lost by farmers varies
widely among enterprises and areas of
the country. The shift of entrepreneural
functions off the farm has been greatest for poultry and some specialty
crops. Farmers in the Midwest appear
to have retained more decision-making
latitude than farmers in other areas,
but their traditional types of operations are being strongly challenged by
integrated production-marketing systems in other sections.
Other Characteristics of the
Agricultural Industry
Other well-known characteristics of
agriculture intensify changes in number, size, and managerial independence
of farmers as well as bring repeated
pressures on earnings. Uncoordinated
output frequently results in supplies
greater than the market will absorb
without sharp declines in prices.
Quantities taken by the domestic market are little influenced by income or
price changes, and foreign markets are

Economic and Marketing Information
FOR INDIANA FARMERS
Prepared by the Agricultural Staff of Purdue University, Lafayette, Indiana
March 29, 1968
INDIANA FARMERS
Alternatives for MAINTAINING THE FAMILY FARM*
Farmers today are much concerned
about the future organization of agriculture. Their loss of managerial independence is distintegrating the family
farm in ways not fully visible from
trends in farm numbers and sizes.
Farmers see at stake their freedom
and economic status relative to other
groups.
Farmers still have some options for
retaining and perhaps advancing the
entrepreneural independence inherent
in family farm agriculture if they
desire to do so. In terms of public
policy, the most forceful argument
for saving the family farm is to support decentralized decision-making and
diffused economic power in our society.
The Changing Structure of
Farming
Rapid change in number and sizes
of farms is an important cause of
anxiety among farmers and disturbances in rural communities, but this
alone is not the central issue. In size
of business, most farm production units
can still be classified as family farms.
That is, farm families provide a large
part of the labor except for seasonal
work and transitional stages in the
families. Furthermore, research studies
relating cost per unit to size have
generally shown that all of the economies of size can be achieved by modern
and fully mechanized one-man and
* This article was condensed from a speech
presented at Farm Science Days, Purdue
University, January 9, 1968.
by Paul L. Farris, Agricultural Economics
two-man farms. Although technology
will not remain constant in the future,
10 or 20 years from now we will
probably still count large numbers of
family size farms.
This is not to say that adequate
size of business is not important. While
the total number of farms in the
United States dropped from 4-1 million in 1959 to 3-25 million in 1966,
those with annual sales of $20,000 or
more rose from 325,000 to 527,000.
These farms accounted for about half
of the value of all farm products sold
in 1959 and about two-thirds in 1966.
Large farms also earned higher
average rates per unit of labor and
capital employed in farming than did
smaller farms. Many operators of small
units recognize that they must grow
larger to earn returns more nearly comparable with returns to similar resources employed outside of agriculture. Hence, farmers compete intensely
for additional land.
The share of business done by large
farms is expected to continue rising,
but the increase will come mainly from
greater numbers of farms in large size
classes rather than large farms in existence growing to massive size.
Loss of Managerial Independence
When we turn to entrepreneural
functions, we often see more profound
change. In producing some commodities, farmers are subject to increasing
degrees of managerial supervision from
suppliers and creditors. In selling,
farmers are faced with increasing pressures and incentives to standardize
product quality and to gear large and
regular volumes of product supplies
to particular market outlets.
Options in selling are being narrowed further by a reduced number of
buyers and by disappearance of traditional open markets. Many producers
are finding it more and more desirable
to have a specific sales outlet in sight
before making production decisions.
How much managerial independence has been lost by farmers varies
widely among enterprises and areas of
the country. The shift of entrepreneural
functions off the farm has been greatest for poultry and some specialty
crops. Farmers in the Midwest appear
to have retained more decision-making
latitude than farmers in other areas,
but their traditional types of operations are being strongly challenged by
integrated production-marketing systems in other sections.
Other Characteristics of the
Agricultural Industry
Other well-known characteristics of
agriculture intensify changes in number, size, and managerial independence
of farmers as well as bring repeated
pressures on earnings. Uncoordinated
output frequently results in supplies
greater than the market will absorb
without sharp declines in prices.
Quantities taken by the domestic market are little influenced by income or
price changes, and foreign markets are